When property prices were soaring it made it intensely difficult for first homebuyers to secure a rung on the property ladder, even with the government’s First Homebuyers Grant initiative. As the market takes a slight dip and with interest rates holding we are entering a phase where first homebuyers are finally getting a look in.
While Australia is seeing a drop in market, buying property is far from cheap, with average medium prices still high enough to make the task of buying a first home a big investment with a lot of careful planning, assessment and saving in place. What it does mean is that those who have been putting in work to save for a deposit might find they can get their foot in the door a little sooner than predicted.
And the all-time market high prices, seen over the last half decade might not return for a while, making a safe harbour for those ready to save now and buy in the next few years.
Part of the reason for more opportunities for first homeowners is that seasoned buyers are less likely to buy while market experts are predicting further drops to come. Even when the property they are interested in comes back with a significant discount, a prospect that would have most first time buyers jumping with joy, those in the know are actually put off by an added discount. There is genuine fear that even at reduced prices they might overspend on what a property is worth. In a falling market that overspend might take years to recoup, rather than a matter of months in a booming market where market appreciation would catch you back up incredibly fast.
There is a slight danger that in eagerness to get started, first homebuyers might leap at an offer, where if they had of waited, even six months, the same property might be offered for significantly less.
Most professional advisors are saying the best course of action is to be watchful and wait, especially over the next short period when investment properties sales are expected to increase. Some indications, like changes to bank lending standards, small and mid sized lenders increasing their rates and increased repayments on loans means that those who have invested in property for profit may feel now is the time to cut their losses and sell. This will be especially true for those investors who have previously been on an interest only mortgage and who now have to switch to principle and interest payments. In these cases owners will be looking to sell before the switch date.
Having more properties on the market will further water down competition and some of these investors might be looking for a fast sale for long-term damage control.
Another factor that is helping first homebuyers get into the market right now is a reduced number of foreign buyers. Statistics show a significant drop in purchases made from foreign investors since 2014, falling from the then 17 percent to a low 9.6 percent of the current market.
While the good news is great to hear there will be some challenges as well, with more home owner-occupiers prepared to sit tight and wait out the slower market, and fewer sales going to auction if auctions continue to show lower price performance. What that means is more opportunity to shop around, research and negotiate, while it might seem tedious and time consuming, it’s the only way to go, after all this is probably the biggest investment of your life, it’s essential to take the time to get it right.
It’s always critical to do thorough research into a property before you make a purchase, regardless of the current market situation. Making an emotionally charged decision can lead to heartbreak. Buying your first home is a big task and full of risk, rewards and complications. Having the right team with you from the outset can help align you with the perfect property, one that will reap rewards long into the future.
So keep a patient and watchful eye on the property market and work with professionals who can help estimate a properties worth, iron out any legal issues and make sure your lending bank agrees on the property worth before you commit to buy. Above all, take your time finding the right home for you, it’s so very worth it.